How Should Investors Feel About Consumer Portfolio Services' (NASDAQ:CPSS) CEO Remuneration?
Charles Bradley became the CEO of Consumer Portfolio Services, Inc. (NASDAQ:CPSS) in 1992, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Consumer Portfolio Services.
Check out our latest analysis for Consumer Portfolio Services
Comparing Consumer Portfolio Services, Inc.'s CEO Compensation With the industry
Our data indicates that Consumer Portfolio Services, Inc. has a market capitalization of US$106m, and total annual CEO compensation was reported as US$3.9m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$995k.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$1.1m. This suggests that Charles Bradley is paid more than the median for the industry. Moreover, Charles Bradley also holds US$12m worth of Consumer Portfolio Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$995k | US$995k | 25% |
Other | US$2.9m | US$3.0m | 75% |
Total Compensation | US$3.9m | US$4.0m | 100% |
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. According to our research, Consumer Portfolio Services has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Consumer Portfolio Services, Inc.'s Growth
Consumer Portfolio Services, Inc. has reduced its earnings per share by 12% a year over the last three years. Its revenue is up 13% over the last year.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Consumer Portfolio Services, Inc. Been A Good Investment?
Consumer Portfolio Services, Inc. has generated a total shareholder return of 4.2% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As previously discussed, Charles is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO is underpaid.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Consumer Portfolio Services we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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